Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10Q
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(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2011
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
For the transition period from __________ to ___________
Commission file number: 000-26317
GARNER INVESTMENTS, INC.
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(Exact name of registrant as specified in its charter)
Wyoming 84-1384961
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(State of Incorporation) (IRS Employer ID Number)
PO Box 3412, Casper, Wyoming 82602
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(Address of principal executive offices)
307-472-3000
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(Registrant's Telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the past 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to the filing requirements for
the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 for Regulation S-T (ss.232.405
of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [ ] No []
Indicate by check mark whether the registrant is a large accelerated file, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ]
Smaller reporting company [X] (Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
Indicate the number of share outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of May 12, 2011 there were 4,280,000 shares of the registrant's common stock
issued and outstanding.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) Page
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Balance Sheets - March 31, 2011 and December 31, 2010 (Audited) F-1
Statements of Operations -
Three months ended March 31, 2011 and 2010 and
From February 13, 1997 (Inception) to March 31, 2011 F-2
Statements of Changes in Shareholders' Deficit -
From February 13, 1997 (Inception) to March 31, 2011 F-3
Statements of Cash Flows -
Three months ended March 31, 2011 and 2010 and
From February 13, 1997 (Inception) to March 31, 2011 F-4
Notes to the Financial Statements F-5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 1
Item 3. Quantitative and Qualitative Disclosures About Market Risk
- Not Applicable 4
Item 4. Controls and Procedures 4
PART II - OTHER INFORMATION
Item 1. Legal Proceedings -Not Applicable 5
Item 1A. Risk Factors - Not Applicable 5
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 5
-Not Applicable
Item 3. Defaults Upon Senior Securities - Not Applicable 5
Item 4. Removed and Reserved 5
Item 5. Other Information - Not Applicable 5
Item 6. Exhibits 5
SIGNATURES 6
PART I
ITEM 1. FINANCIAL STATEMENTS
GARNER INVESTMENTS, INC.
(A Development Stage Company)
BALANCE SHEETS
(Unaudited)
March 31, December 31,
2011 2010
--------------- ---------------
Assets
Current Assets:
Cash $ - $ -
--------------- ---------------
Total Current Assets - -
--------------- ---------------
Other assets:
Farmout Agreement 3,500 3,500
--------------- ---------------
Total Other Assets 3,500 3,500
--------------- ---------------
Total Assets $ 3,500 $ 3,500
=============== ===============
Liabilities and Stockholders' (Deficit) Equity
Current liabilities
Accounts payable $ 55,992 $ 55,600
--------------- ---------------
Total Current Liabilities 55,992 55,600
Stockholders' (Deficit) Equity
Common stock, $0.001 par value; 50,000,000 shares
authorized, 4,280,000 shares issued and outstanding
at March 31, 2011 and December 31, 2010, respectively 4,280 4,280
Additional paid-in capital 8,710 8,710
Deficit accumulated during the development stage (65,482) (65,090)
--------------- ---------------
Total Stockholders' (Deficit) Equity (52,492) (52,100)
--------------- ---------------
Total liabilities and stockholders' (deficit) equity $ 3,500 $ 3,500
=============== ===============
See the notes to these financial statements.
F-1
GARNER INVESTMENTS, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
February 13, 1997
For The Three Months Ended (Inception) to
March 31, March 31,
2011 2010 2011
------------ -------------- ---------------------
Revenue: $ - $ - $ -
------------ -------------- ---------------------
Operational expenses:
Office expenses 392 - 56,687
Filing fees - - 85
Audit fees - - 8,710
------------ -------------- ---------------------
Total operational expenses 392 - 65,482
------------ -------------- ---------------------
Net loss $ (392) $ - $ (65,482)
============ ============== =====================
Per share information
Net loss per common share
Basic $ * $ *
Fully diluted * *
============ ==============
Weighted average number of common
stock outstanding 4,280,000 4,280,000
============ ==============
* Less than $(0.01) per share.
See the notes to these financial statements.
F-2
GARNER INVESTMENTS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDER'S (DEFICIT) EQUITY From February 13, 1997
(Inception) through March 31, 2011
(Unaudited)
Deficit accum
Additional During
Common Stock paid-in Development
Number of shares Amount Capital Stage Totals
--------------------------- ------------ -------------- ------------
Issuance of stock for cash 480,000 $ 480 $ 1,020 $ - $ 1,500
Net loss - - - (144) (144)
------------- ----------- ------------ -------------- ------------
Balance - December 31, 1997 480,000 480 1,020 (144) 1,356
------------- ----------- ------------ -------------- ------------
Issuance of stock for cash 300,000 300 450 - 750
Net loss - - - (1,557) (1,557)
------------- ----------- ------------ -------------- ------------
Balance - December 31, 1998 780,000 780 1,470 (1,701) 549
------------- ----------- ------------ -------------- ------------
Net loss - - - (240) (240)
------------- ----------- ------------ -------------- ------------
Balance - December 31, 1999 780,000 780 1,470 (1,941) 309
------------- ----------- ------------ -------------- ------------
Net loss - - - (50) (50)
------------- ----------- ------------ -------------- ------------
Balance - December 31, 2000 780,000 780 1,470 (1,991) 259
------------- ----------- ------------ -------------- ------------
Net loss - - - (259) (259)
------------- ----------- ------------ -------------- ------------
Balance - December 31, 2001 780,000 780 1,470 (2,250) -
------------- ----------- ------------ -------------- ------------
Net loss - - - - -
------------- ----------- ------------ -------------- ------------
Balance - December 31, 2002 780,000 780 1,470 (2,250) -
------------- ----------- ------------ -------------- ------------
Net loss - - - - -
------------- ----------- ------------ -------------- ------------
Balance - December 31, 2003 780,000 780 1,470 (2,250) -
------------- ----------- ------------ -------------- ------------
Net loss - - - - -
------------- ----------- ------------ -------------- ------------
Balance - December 31, 2004 780,000 780 1,470 (2,250) -
------------- ----------- ------------ -------------- ------------
Net loss - - - - -
------------- ----------- ------------ -------------- ------------
Balance - December 31, 2005 780,000 780 1,470 (2,250) -
------------- ----------- ------------ -------------- ------------
Issuance of stock for oil lease 3,500,000 3,500 - - 3,500
Net loss - - - - -
------------- ----------- ------------ -------------- ------------
Balance - December 31, 2006 4,280,000 4,280 1,470 (2,250) 3,500
------------- ----------- ------------ -------------- ------------
Net loss - - - - -
------------- ----------- ------------ -------------- ------------
Balance - December 31, 2007 4,280,000 4,280 1,470 (2,250) 3,500
------------- ----------- ------------ -------------- ------------
Shareholder capital contribution - - 5,740 - 5,740
Net loss - - - (22,461) (22,461)
------------- ----------- ------------ -------------- ------------
Balance - December 31, 2008 4,280,000 4,280 7,210 (24,711) (13,221)
------------- ----------- ------------ -------------- ------------
Net loss - - - (14,944) (14,944)
------------- ----------- ------------ -------------- ------------
Balance - December 31, 2009 4,280,000 4,280 7,210 (39,655) (28,165)
------------- ----------- ------------ -------------- ------------
Shareholder capital contribution - - 1,500 - 1,500
Net Loss - - - (25,435) (25,435)
------------- ----------- ------------ -------------- ------------
Balance - December 31, 2010 4,280,000 4,280 8,710 (65,090) (52,100)
------------- ----------- ------------ -------------- ------------
Net Loss - - - (392) (392)
------------- ----------- ------------ -------------- ------------
Balance - March 31, 2011 $ 4,280,000 $ 4,280 $ 8,710 $ (65,482) $ (52,492)
============= =========== ============ ============== ============
See the notes to these financial statements.
F-3
GARNER INVESTMENTS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(Unaudited)
February 13,
1997
For The Three Months Ended (Inception) to
March 31, March 31,
2011 2010 2011
-------------- -------------- -----------------
Cash Flows from Operating Activities:
Net Loss $ (392) $ - $ (65,482)
Adjustments to reconcile net loss to net cash used
in operating activities:
Increase in accounts payable 392 - 55,992
-------------- -------------- -----------------
Net Cash Used by Operating Activities - - (9,490)
-------------- -------------- -----------------
Net Cash Used in Investing Activities - - -
-------------- -------------- -----------------
Cash Flows from Financing Activities:
Shareholder payment of accounts payable - - 7,240
Proceeds from stock issuance, net of
issuance costs - - 2,250
-------------- -------------- -----------------
Net Cash Provided by Financing Activities - - 9,490
-------------- -------------- -----------------
Net Increase (decrease) in Cash - - -
Cash and Cash Equivalents - Beginning of Period - - -
-------------- -------------- -----------------
Cash and Cash Equivalents - End of Period $ - $ - $ -
============== ============== =================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest expense $ - $ - $ -
============== ============== =================
Cash paid for income taxes $ - $ - $ -
============== ============== =================
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
ACTIVITIES:
Issuance of common stock for oil lease $ - $ - $ 3,500
============== ============== =================
See the notes to these financial statements.
F-4
GARNER INVESTMENTS, INC.
(A Development Stage Company)
Notes to the Financial Statements
For the Three Months Ended March 31, 2011
(Unaudited)
NOTE 1 - BUSINESS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Business
Garner Investments, Inc. ("the Company") was incorporated in February 13, 1997
in the state of Wyoming. The Company was originally incorporated for the purpose
of general investing. Due to an inability to raise adequate financing the
Company was forced to cease operations in 2001. On October 12, 2004, the Company
filed a Form 15-12G, with the Securities and Exchange Commission ("SEC") to
cease its filing obligations under the Securities Act of 1934. On November 14,
2007, the Company filed a Registration Statement on Form S-1 in order to
register its outstanding shares of common stock and resume its SEC filing
status.
The Company's fiscal year end is December 31st. The Company's financial
statements are presented on the accrual basis of accounting.
Basis of Presentation
Development Stage Company
The Company has not earned significant revenues from planned operations.
Accordingly, the Company's activities have been accounted for as those of a
"Development Stage Company." Therefore, the Company's financial statements of
operations, stockholders' equity and cash flows disclose activity since the date
of the Company's inception.
Interim Presentation
In the opinion of the management of the Company, the accompanying unaudited
financial statements include all material adjustments, including all normal and
recurring adjustments, considered necessary to present fairly the financial
position and operating results of the Company for the periods presented. The
financial statements and notes do not contain certain information included in
the Company's financial statements for the year ended December 31, 2010. It is
the Company's opinion that when the interim financial statements are read in
conjunction with the December 31, 2010 Audited Financial Statements, the
disclosures are adequate to make the information presented not misleading.
Interim results are not necessarily indicative of results for a full year or any
future period.
Going Concern
The Company's financial statements for the three months ended March 31, 2011
have been prepared on a going concern basis, which contemplates the realization
of assets and the settlement of liabilities and commitments in the normal course
of business. The Company reported an accumulated deficit of $65,482 as of March
31, 2011. The Company did not recognize revenues from its activities during the
three months ended March 31, 2011. These factors raise substantial doubt about
the Company's ability to continue as a going concern.
F-5
Significant Accounting Policies
Use of Estimates
The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of
three months or less and money market instruments to be cash equivalents.
Oil and Gas Properties, Full Cost Method
The Company uses the full cost method of accounting for oil and gas producing
activities. Costs to acquire mineral interests in oil and gas properties, to
drill and equip exploratory wells used to find proved reserves, and to drill and
equip development wells including directly related overhead costs and related
asset retirement costs are capitalized.
Under this method, all costs, including internal costs directly related to
acquisition, exploration and development activities are capitalized as oil and
gas property costs. Properties not subject to amortization consist of
exploration and development costs which are evaluated on a property-by-property
basis. Amortization of these unproved property costs begins when the properties
become proved or their values become impaired. The Company assesses the
realization of unproved properties, taken as a whole, if any, on at least an
annual basis or when there has been an indication that impairment in value may
have occurred. Impairment of unproved properties is assessed based on
management's intention with regard to future exploration and development of
individually significant properties and the ability of the Company to obtain
funds to finance such exploration and development. If the results of an
assessment indicate that the properties are impaired, the amount of the
impairment is added to the capitalized costs to be amortized.
Costs of oil and gas properties will be amortized using the units of production
method.
In applying the full cost method, the Company will perform an impairment test
(ceiling test) at each reporting date, whereby the carrying value of property
and equipment is compared to the "estimated present value," of its proved
reserves discounted at a 10-percent interest rate of future net revenues, based
on current economic and operating conditions, plus the cost of properties not
being amortized, plus the lower of cost or fair market value of unproved
properties included in costs being amortized, less the income tax effects
related to book and tax basis differences of the properties. If capitalized
costs exceed this limit, the excess is charged as an impairment expense.
Revenue Recognition
The Company recognizes revenue when it is earned and expenses are recognized
when they occur.
F-6
Net Loss per Share
Basic net loss per common share is calculated by dividing the net loss
applicable to common shares by the weighted average number of common and common
equivalent shares outstanding during the period. For the three months ended
March 31, 2011 and 2010, there were no potential common equivalent shares used
in the calculation of weighted average common shares outstanding as the effect
would be anti-dilutive because of the net loss.
Stock-Based Compensation
The Company adopted the provisions of and accounts for stock-based compensation
using an estimate of value in accordance with the fair value method. Under the
fair value recognition provisions of this statement, stock-based compensation
cost is measured at the grant date based on the fair value of the award and is
recognized as expense on a straight-line basis over the requisite service
period, which generally is the vesting period. The Company elected the
modified-prospective method, under which prior periods are not revised for
comparative purposes. The valuation method applies to new grants and to grants
that were outstanding as of the effective date and are subsequently modified.
Fair Value of Financial Instruments
The carrying amount of accounts payable is considered to be representative of
respective fair values because of the short-term nature of these financial
instruments.
Other Comprehensive Income
The Company has no material components of other comprehensive income (loss) and
accordingly, net loss is equal to comprehensive loss in all periods.
Income Taxes
Provision for income taxes represents actual or estimated amounts payable on tax
return filings each year. Deferred tax assets and liabilities are recorded for
the estimated future tax effects of temporary differences between the tax basis
of assets and liabilities and amounts reported in the accompanying balance
sheets, and for operating loss and tax credit carry forwards. The change in
deferred tax assets and liabilities for the period measures the deferred tax
provision or benefit for the period. Effects of changes in enacted tax laws on
deferred tax assets and liabilities are reflected as adjustment to the tax
provision or benefit in the period of enactment.
Recent Accounting Pronouncements
There were accounting standards and interpretations issued during the three
months ended March 31, 2011, none of which are expected to have a material
impact on the Company's financial position, operations or cash flows.
NOTE 2 - OTHER ASSETS
In August 2006, the Company issued 3,500,000 shares of its restricted common
stock to an unrelated third party in exchange as part of a Farmout Agreement on
an oil lease located in Natrona County, Wyoming. The shares were valued at
$3,500 at the time of the transaction ($0.001 per share). The Farmout Agreement
provides for the Company to retain 75% of the W.I. after payout by drilling a
7,000 foot Madison test. The Company will retain 100% of the W.I. income until
payout. . In December 31, 2010, the Farmout Agreement was extended to April 30,
2011.
F-7
NOTE 3 - STOCKHOLDERS' EQUITY
The authorized capital stock of the Company is 50,000,000 shares of common stock
with a $0.001 par value. At March 31, 2011, the Company had 4,280,000 shares of
its common stock issued and outstanding. The Company does not have any preferred
shares issued or authorized.
During the three months ended March 31, 2011, the Company did not issue any
shares of its common stock.
NOTE 4 - SUBSEQUENT EVENTS
The Company has evaluated it activities subsequent to the three months ended
March 31, 2011 through May 11, 2011 and found no reportable subsequent events.
F-8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with our unaudited
financial statements and notes thereto included herein. In connection with, and
because we desire to take advantage of, the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, we caution readers regarding
certain forward looking statements in the following discussion and elsewhere in
this report and in any other statement made by, or on our behalf, whether or not
in future filings with the Securities and Exchange Commission. Forward-looking
statements are statements not based on historical information and which relate
to future operations, strategies, financial results or other developments.
Forward looking statements are necessarily based upon estimates and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control and many
of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in any forward looking
statements made by, or on our behalf. We disclaim any obligation to update
forward-looking statements.
The independent registered public accounting firm's report on the Company's
financial statements as of December 31, 2010, and for each of the years in the
two-year period then ended, includes a "going concern" explanatory paragraph,
that describes substantial doubt about the Company's ability to continue as a
going concern.
PLAN OF OPERATIONS
------------------
We had we had no revenues during the three months ended March 31, 2011. We have
minimal capital, minimal cash, and only our intangible assets consisting of our
business plan, relationships, contacts and farmout mineral prospect. We are
illiquid and need cash infusions from investors or shareholders to provide
capital, or loans from any sources.
During the three months ended March 31, 2011, our operations were focused on the
maintenance of our accounting records and working on the Company's annual
report.
On August 28, 2006, Garner Investments entered into a Farmout Agreement with Ms.
Sharon K. Fowler (Fowler) to commit and drill wells in Farmout Lands. The
Farmout Agreement with Fowler provides that the Company must commence drilling a
well within eighteen months after the date of the farmout or the farmed acreage
will revert to Ms. Fowler, however, on October 13, 2009 an extension of the
farmout was executed to extend the performance date to December 31, 2010 and was
extended on December 31, 2010 to April 30, 2011.
Ms. Fowler retains a 5% overriding Royalty on any oil and gas produced and a 10%
back-in working interest. There is a 12 1/2% Royalty to State of Wyoming on the
lease and a 5% Royalty held by Sharon Fowler, resulting in a 82.5% net revenue
interest to Garner Investments on the lease farmout.
We will need substantial additional capital to support our proposed future
energy operations. We have no revenues. We have no committed source for any
funds as of date here. No representation is made that any funds will be
available when needed. In the event funds cannot be raised when needed, we may
not be able to carry out our business plan, may never achieve sales or royalty
income, and could fail in business as a result of these uncertainties.
1
Decisions regarding future participation in exploration wells or geophysical
studies or other activities will be made on a case-by-case basis. We may, in any
particular case, decide to participate or decline participation. If
participating, we may pay our proportionate share of costs to maintain our
proportionate interest through cash flow or debt or equity financing. If
participation is declined, we may elect to farmout, non-consent, sell or
otherwise negotiate a method of cost sharing in order to maintain some
continuing interest in the prospect.
The independent registered public accounting firm's report on the Company's
financial statements as of December 31, 2010, and for each of the years in the
two-year period then ended, includes a "going concern" explanatory paragraph,
that describes substantial doubt about the Company's ability to continue as a
going concern.
RESULTS OF OPERATIONS
---------------------
For the Three Months Ended March 31, 2011 Compared to the Three Months Ended
March 31, 2010
During the three months ended March 31, 2011 and 2010, we did not recognize any
revenues from our operations.
During the three months ended March 31, 2011, we incurred general and
administrative expenses of $392 compared to nil during the three months ended
March 31, 2010. The increase of $392 was a result of starting work earlier on
our audit and annual report in comparison to the prior period.
During the three months ended March 31, 2011, we incurred a net loss of $392.
During the three months ended March 31, 2010, we did not incur either a net loss
or net income.
LIQUIDITY
---------
We have no cash or other liquid assets at March 31, 2011, and we will be reliant
upon shareholder loans or private placements of equity to fund any kind of
operations. We have secured no sources of loans or private placements at this
time.
During the three months ended March 31, 2011, we did used $392 in our
operational activities. During the three months ended March 31, 2011, we
recognized a net loss of $392 and did not have any non-cash adjustments to net
losses.
During the three months ended March 31, 2010, we did not use or receive funds
from operations.
During the three months ended March 31, 2011 and 2010, we did not use or receive
any funds from investment activities.
During the three months ended March 31, 2011 and 2010, we did not receive or use
any funds from our financing activities.
Short Term.
On a short-term basis, we do not generate any revenue or revenues sufficient to
cover operations. Based on prior history, we will continue to have insufficient
revenue to satisfy current and recurring liabilities as it seeks explore. For
short term needs we will be dependent on receipt, if any, of offering proceeds.
Our assets were $3,500 and liabilities were $55,992 as of March 31, 2010.
2
Capital Resources
We have only common stock as our capital resource.
We have no material commitments for capital expenditures within the next year,
however if operations are commenced, substantial capital will be needed to pay
for participation, investigation, exploration, acquisition and working capital.
Need for Additional Financing
We do not have capital sufficient to meet our cash needs. We will have to seek
loans or equity placements to cover such cash needs. Once exploration commences,
our needs for additional financing is likely to increase substantially.
No commitments to provide additional funds have been made by our management or
other stockholders. Accordingly, there can be no assurance that any additional
funds will be available to us to allow it to cover our expenses as they may be
incurred.
Critical Accounting Policies
----------------------------
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of
three months or less and money market instruments to be cash equivalents.
Oil and Gas Properties, Full Cost Method
The Company uses the full cost method of accounting for oil and gas producing
activities. Costs to acquire mineral interests in oil and gas properties, to
drill and equip exploratory wells used to find proved reserves, and to drill and
equip development wells including directly related overhead costs and related
asset retirement costs are capitalized.
Under this method, all costs, including internal costs directly related to
acquisition, exploration and development activities are capitalized as oil and
gas property costs. Properties not subject to amortization consist of
exploration and development costs which are evaluated on a property-by-property
basis. Amortization of these unproved property costs begins when the properties
become proved or their values become impaired. The Company assesses the
realization of unproved properties, taken as a whole, if any, on at least an
annual basis or when there has been an indication that impairment in value may
have occurred. Impairment of unproved properties is assessed based on
management's intention with regard to future exploration and development of
individually significant properties and the ability of the Company to obtain
funds to finance such exploration and development. If the results of an
assessment indicate that the properties are impaired, the amount of the
impairment is added to the capitalized costs to be amortized.
3
Costs of oil and gas properties will be amortized using the units of production
method.
In applying the full cost method, the Company will perform an impairment test
(ceiling test) at each reporting date, whereby the carrying value of property
and equipment is compared to the "estimated present value," of its proved
reserves discounted at a 10-percent interest rate of future net revenues, based
on current economic and operating conditions, plus the cost of properties not
being amortized, plus the lower of cost or fair market value of unproved
properties included in costs being amortized, less the income tax effects
related to book and tax basis differences of the properties. If capitalized
costs exceed this limit, the excess is charged as an impairment expense.
Revenue Recognition
The Company recognizes revenue when it is earned and expenses are recognized
when they occur.
ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable
ITEM 4. CONTROLS AND PROCEDURES
Disclosures Controls and Procedures
We have adopted and maintain disclosure controls and procedures (as such term is
defined in Rules 13a 15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) and that are designed to ensure that
information required to be disclosed in our reports under the Exchange Act, is
recorded, processed, summarized and reported within the time periods required
under the SEC's rules and forms and that the information is gathered and
communicated to our management, including our Chief Executive Officer (Principal
Executive Officer) and Chief Financial Officer (Principal Financial Officer), as
appropriate, to allow for timely decisions regarding required disclosure.
As required by SEC Rule 15d-15(b), our Chief Executive Officer carried out an
evaluation under the supervision and with the participation of our management,
of the effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Exchange Act Rule 15d-14 as of the end of the period
covered by this report. Based on the foregoing evaluation, our Chief Executive
Officer has concluded that our disclosure controls and procedures are effective
in timely alerting them to material information required to be included in our
periodic SEC filings and to ensure that information required to be disclosed in
our periodic SEC filings is accumulated and communicated to our management,
including our Chief Executive Officer, to allow timely decisions regarding
required disclosure.
There was no change in our internal control over financial reporting that
occurred during the fiscal quarter ended March 31, 2011, that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
4
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
NONE.
ITEM 1A. RISK FACTORS
Not Applicable to Smaller Reporting Companies.
ITEM 2. CHANGES IN SECURITIES
NONE.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE.
ITEM 4. REMOVED AND RESERVED
ITEM 5. OTHER INFORMATION
NONE.
ITEM 6. EXHIBITS
Exhibits. The following is a complete list of exhibits filed as part of this
Form 10-Q. Exhibit numbers correspond to the numbers in the Exhibit Table of
Item 601 of Regulation S-K.
Exhibit 31.1 Certification of Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act
Exhibit 31.2 Certification of Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act
Exhibit 32.1 Certification of Principal Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act
Exhibit 32.2 Certification of Principal Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act
5
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
GARNER INVESTMENTS, INC.
Registrant)
Dated: May 12, 2011 By: /s/ Roy C. Smith
----------------
Roy C. Smith (Principal
Executive Officer,
President and Chief
Executive Officer)
Dated: May 12, 2011 By: /s/Michael R. Butler
--------------------
Michael R. Butler, (Chief
Financial Officer/Principal
Accounting Officer/
Secretary/Treasurer)
